NORTHAMPTON — Mayor Gina-Louise Sciarra plans to boost the city’s spending on education, even as state aid continues its decade-long flatline and local receipts like marijuana taxes and parking revenue remain lower than pre-pandemic numbers.
“I have committed 4% increases to both of our school districts,” Sciarra said during her first budget presentation as mayor, held virtually on Tuesday night as a joint meeting of the City Council, the School Committee, the trustees of Smith Vocational & Agricultural High School and district superintendents. “Our local support of our schools is vitally important, and I really think that it is a defining quality of our community.”
The city spent $57.85 million, or 54.6% of the budget, on education last year. Overall, the costliest budget items were schools, health insurance for municipal employees — making up 12% of the budget — retirement benefits and worker’s compensation insurance.
Fiscal 2023 runs from July 1, 2022 to June 1, 2023. State law requires the city to pass a balanced budget; using free cash or any of the stabilization funds requires a vote of the City Council.
“At this point, we are not projecting the use of the fiscal stabilization fund,” Sciarra said.
Net state aid — the total the city receives after paying school choice sending tuition and contributing to public libraries — has remained in the $10 million range for 12 years, a fact that Sciarra said “has frustrated and motivated me.” She showed a chart that compared state aid over 20 years, with the highest total in fiscal 2002.
“Expenses have not remained flat, so what this means is that we get significantly less of our state tax dollars than we did 20 years ago, and we get less for our state tax dollars,” Sciarra said, which puts pressure on local taxpayers to make up the difference.
Under Gov. Charlie Baker’s state budget proposal, net aid to Northampton would increase by $190,656, or 1.8%. Net education aid under Chapter 70 would rise $995 over last year, or 0.01%.
“This increase is very, very low, particularly in light of the fact that state revenues were pretty robust this year,” Sciarra said.
City revenue is projected to climb $4.08 million compared to last year, including a property tax levy increase of $1.74 million and $750,000 worth of new growth in the tax base due to construction, subdivisions and renovations.
But, Sciarra said, the federal government has not yet reimbursed the city for $1.1 million in expenses related to the COVID-19 pandemic, and if some or all of those requests are rejected, the city may have to tap into its reserves in fiscal 2023.
“We are conservatively predicting our local revenues will continue to rebound,” she said, but the impact of coronavirus variant surges on restaurants and other hospitality businesses is not yet known.
Taxes comprise 70% of city revenue. The biggest contributors are real estate and personal property taxpayers, followed by excise taxes including meals, hotels and motels, payment-in-lieu-of-taxes (PILOT) money from nonprofit organizations, and marijuana dispensaries.
For marijuana revenue, Sciarra said 2020 was “our highest year,” and the most recent quarterly total was down 24% compared to the prior year.
“This is still a very volatile industry … and we need to be careful about estimating this as a revenue source because, as we see, it has started to decrease,” Sciarra said.
Parking revenues may never return to pre-COVID levels due to lifestyle changes and the expansion of remote work, she said.
Sciarra compared the local tax levy to 11 other communities in the area: Agawam, Amherst, Chicopee, East Longmeadow, Easthampton, Greenfield, Holyoke, Longmeadow, South Hadley, West Springfield and Westfield.
She said Northampton’s residential property tax rate is in the lower half of that group, and the city has the third-lowest commercial tax rate, “making us attractive for businesses.” Only Amherst and Longmeadow have higher home values, and Northampton has the highest new growth value in the last fiscal year.
Department budgets are not decided until later in the city’s process and partly depend on the outcome of upcoming collective bargaining with employee unions.
The deadline for both of the city’s school districts — Northampton Public Schools and Smith Vocational — to submit their adopted budgets to the mayor’s office is April 17. Sciarra will have until May 16 to present a balanced budget to the City Council and the council’s final approval vote is required by June 30.
Brian Steele can be reached at bsteele@gazettenet.com.